Mark Pritchard: I am on record as saying that the best two-week holiday that any person inside or outside this House can have is a week in Wales, preceded by a week in Shropshire en route to Wales. Given the latest figures from the Welsh Assembly Government showing that room bookings in Wales are down by 5.3 per cent. and restaurant bookings are down by 13.4 per cent., why are the Welsh Assembly Government cutting the Welsh tourism budget by £74 million?

Roger Williams: Tourism is very important in Wales, employing, as it does, about 10 per cent. of the total work force. However, the Welsh Assembly Minister with responsibility for tourism announced a fall of nearly three quarters of a million visitors to Wales last year compared with the previous year. The Department for Culture, Media and Sport announced, through the comprehensive spending review, a 20 per cent. cut in VisitBritain's funding over the next four years. Will the Minister talk to his colleagues in DCMS and emphasise the need for VistBritain to play its full part in getting visitors into Wales?

Cheryl Gillan: But the Secretary of State knows that the people in the valleys are not interested in a history lesson about the 1980s; they are interested in what is happening in their pockets now. Wales under Labour is the poorest part of the United Kingdom, and any financial attack on the lowest paid affects huge numbers of people. Today, we have learned that the Institute for Fiscal Studies has said that the Chancellor's quick political fix of compensation for the abolition of the 10p tax rate has backfired, and that 18 million families in the United Kingdom—many of them in Wales—will still end up paying more tax. Why is the Secretary of State standing by and allowing his Government to push Welsh families, who are already struggling, deeper into debt?

Paul Murphy: I am sure that the hon. Lady will accept that Wales saw the biggest percentage increase per head in gross disposable household income of all the United Kingdom countries and English regions between 1999 and 2006. It was up nearly 40 per cent., compared with 33 per cent. across the United Kingdom. So we have got better off in Wales over the past 10 years. I accept the point that the hon. Lady is making about the problems with family finances, but I would like to point out to her that over 1 million people in Wales— 22 million basic-rate taxpayers in the whole of the United Kingdom—will benefit from the changes brought in by the Chancellor last week. Furthermore, 8,000 more people in Wales are in work now than last year. That is in contrast to the thousands of people who were out of work in Wales when the Conservative Government were in power.

David Davies: Prison capacity may be increasing, but the Minister is surely aware that the present chronic lack of spaces has led to dangerous prisoners' being taken out of closed prisons and put into the camp at Prescoed, from which they immediately escape. Will he undertake to return to the Justice Minister and demand that enough spaces are built in the closed estate to ensure that people living near open prisons such as Prescoed can sleep safely in their beds at night?

Elfyn Llwyd: Does the Minister accept that there is a rather poor partnership between the National Offender Management Service and the representatives in Wales? May I remind him that, according to the 2006-07 estimates, it cost £890 million to build the London headquarters, compared with the £833 million spent on the probation service as a whole? Does he not recall that, until we amended the Bill that became the Offender Management Act 2007 at a late stage, the National Assembly was not even a statutory consultee in the process?

David Cameron: I wish the Prime Minister well with his efforts, and I thank him and the Government for keeping us regularly updated on this issue in the House. What has happened in China is also a huge tragedy—the Prime Minister and I both went to the Chinese embassy yesterday—but we must not let it knock off the front pages what is happening in Burma.
	I shall turn, if it may, to an issue of domestic politics, which may explain the slightly emptier House of Commons today. Tomorrow, people in Crewe and Nantwich will go to the polls in a by-election. The abolition of the 10p tax rate is clearly a huge issue, so can the Prime Minister tell us whether the £2.7 billion compensation package will be continued into the next financial year?

David Cameron: The last time I looked this was still called Prime Minister's questions. This is not like his thing on YouTube where people ask questions now and he gives an answer after 21 June. He absolutely would not confirm the figures, so will he tell us this? He brought forward his draft Queen's Speech and he introduced a mini Budget, all because of the by-election. Why has he not had the courage to go to Crewe and Nantwich to explain those points to people on the streets of those towns?

Dennis Skinner: Does the Prime Minister recall that 30 years' ago, the then Labour Government introduced what is known as Short money, which enables the Opposition parties to have £4.7 million in the Conservatives' case and £1.7 million in the case of the Liberal Democrats? Does he know, too, that a top Committee of the House recently uncovered large donations to the Tory shadow Cabinet? Is it not like the old familiar story—claiming benefits from the state while making money on the side?

Gordon Brown: I welcome the work that Thales does, both in my hon. Friend's constituency and around the country. Incidentally, it is part of the aircraft carrier order as well. I welcome most of all two things that are happening in the British economy: first, we have more jobs in Britain than ever before in our history—29.5 million—and, secondly, we have restored the apprenticeships that were dying out when we came into power in 1997. Now there are 180,000 apprentices in the country, and that number will continue to rise, in my hon. Friend's constituency and in other constituencies. It is unfortunate that the Conservatives cannot support the increase in apprenticeships that is taking place.

Don Touhig: I beg to move,
	That leave be given to bring in a Bill to provide for parliamentary scrutiny of the Committee on the Grant of Honours, Decorations and Medals.
	The committee is commonly known as the HD committee. This powerful, secretive but completely unaccountable committee has caused grave offence to veterans and to what is probably one of the few Muslim countries in the world that wants to honour British servicemen. My Bill would require the Foreign Secretary, under whose jurisdiction the committee falls, to publish an annual report on its work and to lay that report before Parliament. Within four weeks of its publication, there would be a debate in the House on a motion expressing approval for the report. Through that vote, the House could give its view on the committee's actions during that year.
	If the House voted against the motion, a clear warning would be sent to the HD committee, and its chairman could be called before the Foreign Affairs Committee to explain his committee's actions. If the Bill became law, the decisions of the HD committee would become as open and transparent as they are currently unaccountable and arcane.
	At present, the situation regarding the honours and decorations awarded to British service personnel and veterans is completely unacceptable. The HD committee is free to make confusing and even whimsical rulings about which medals can be awarded, accepted or worn, without any obligation to give a clear rationale for its decisions. It does not publish its minutes or its correspondence, and it appears that no one outside the committee has anything but the vaguest idea about how its decision-making process works. In answer to a parliamentary question that I tabled to the Foreign Secretary on 13 March, I was told that the committee normally transacts business by correspondence, and only met three times during 2005 and 2006.
	No one in this House would disagree that honouring our servicemen and women is a matter of the greatest importance, yet the decisions on who is entitled to recognition are taken by a body that does not answer to any elected authority whatsoever, seldom meets, and never has to explain or account for its decisions. Surely, in an era of openness and transparent Government, it is unacceptable to have a committee that rules on the important matter of decorations and medals which meets on an ad hoc basis and whose discussions are confidential.
	The arcane workings of this committee might never have been brought to light but for the disgraceful treatment that it handed out to 35,000 British veterans of the 1955-1966 Malaysian campaign. The HD committee advised Her Majesty the Queen to allow the veterans to accept the Pingat Jasa Malaysia medal, or PJM, from the Malaysian Government, and then advised Her Majesty that our soldiers must not wear it—British veterans who fought in the jungles of Malaysia shamefully treated by mandarins who fight in the jungles of Whitehall. That bizarre ruling has created great offence among British veterans and bafflement on the part of the Malaysian Government. Surely any chance of strengthening our relations with Malaysia—a predominantly Muslim country—should be welcomed at this time.
	Colleagues in all parts of the House, veterans organisations, and even Ministers of the Crown, have all made representations to the committee to change its advice, but it has remained obstinate in its refusal to do so. An illustration of the widespread support for veterans wearing the PJM occurred last year when I tabled early-day motion 356. It attracted 176 signatures calling on the committee to change the advice given to Her Majesty the Queen on the wearing of the PJM. The right hon. Member for East Hampshire (Mr. Mates) tabled a similar EDM, and that too attracted a large number of signatures. Both EDMs were met with a wall of silence by the HD committee.
	The committee has hidden behind antiquated rules such as the "double medalling rule", which says that when a British award has already been given for the same service, another one cannot be accepted. Then there is the "five-year rule" preventing the acceptance and wearing of non-British awards for events or service that took place more than five years ago. Both those rules are being used to stop veterans wearing the PJM, but their application is confusing and anything but consistent. In a written statement on 31 January 2006, my hon. Friend the Member for Dudley, South (Ian Pearson), the then Trade Minister, who also served as a Foreign Office Minister, said:
	"The Committee on the Grant of Honours, Decorations and Medals...has recommended an exception to two of the long-established rules governing the acceptance and wearing of foreign...awards".—[ Official Report, 31 January 2006; Vol. 422, c. 10WS.]
	In other words, the committee put aside the rules to allow the Malaysian veterans to accept the PJM, then imposed the rules to prevent them from wearing it on public occasions.
	But there is more. The committee then went on to lift the ban on our veterans wearing the PJM for one week during the 50th anniversary of Malaysia's independence, which it celebrated last year. Why did it do that? Because as Queen of Australia and New Zealand, Her Majesty the Queen has given permission for the PJM to be worn by the veterans of those two Commonwealth countries, and as a large number of British ex-servicemen were expected to visit Malaysia during the celebrations, it was feared that the prospect of Commonwealth veterans parading wearing their PJM alongside British veterans who were not allowed to wear their PJM would cause embarrassment in the media in Malaysia and in Britain. What a shameful way to treat our brave soldiers.
	In December 2007, my hon. Friend the Member for Pontypridd (Dr. Howells), the Minister of State, Foreign and Commonwealth Office, said in response to a debate in Westminster Hall:
	"the HD committee has considered the case of the PJM three times, the third time to agree to wearing the medal in Malaysia during the 50th anniversary celebrations."
	He went on:
	"Having considered it in such detail, carefully weighing up the arguments for and against... the committee does not plan to reconsider the matter".—[ Official Report, Westminster Hall, 11 December 2007; Vol. 469, c. 43WH.]
	My hon. Friend has been very supportive; I know that he gave the news with a heavy heart, and that he is as perplexed as the rest of us by the committee's decision.
	As things stand, a House of Commons elected directly by the people of Britain is powerless to do anything about the committee's decisions. This House, directly elected by the people of Britain, is unable to scrutinise the decision of a committee of unelected mandarins. I have met and spoken to many veterans of the Malaysian campaign, and their bravery deserves better than the miserable treatment handed out by the HD Committee. It shows more concern for the niceties of precedent and upsetting the status quo than for honouring our veterans. The inability of the House of Commons to debate or scrutinise the HD committee's decisions is anathema to parliamentary democracy and has no place in the modern world. My Bill would mean that the decisions of the HD committee would at last become subject to rigorous parliamentary scrutiny and debate. It would ensure that the decisions, and the process of how those decisions are made, stand up to examination.
	This House is to have the ultimate responsibility of asking servicemen and women to risk their lives for our country in times of war and armed conflict. Surely, then, this House has the right, indeed the duty, to look after their interests and make the HD committee answerable to Parliament for its actions. Some will argue that the issue of medals is sensitive, and should not be brought into the public domain. If they do, I ask them the following question. Every year a report is brought to Parliament on the working of the British intelligence services. If this House can scrutinise the work of Britain's security services, why can it not scrutinise the work of the HD committee?
	There is no excuse for the total unaccountability of the HD committee, and there is no excuse for its behaviour towards our veterans. Its action brings shame on the British nation. It is time to subject its decisions and deliberations to the scrutiny of Parliament and ensure that brave and courageous servicemen, such as the veterans of the Malaysian campaign, can never again be subject to such disgraceful treatment. I commend the Bill to the House.
	 Question put and agreed to.
	Bill ordered to be brought in by Mr. Don Touhig, Mr. Adam Ingram, Jim Sheridan, Linda Gilroy, Mr. Michael Mates, Mr. James Gray, Miss Ann Widdecombe, Mr. Michael Ancram, Bob Russell, Pete Wishart, Malcolm Bruce and the Rev. Ian Paisley.

Patrick McFadden: It is certainly the case that the LBRO's functions include advice to central Government as well as to local authorities. It has rightly been argued that the powers that the LBRO will enjoy must be balanced by sufficient safeguards to protect local authority interests. The Bill includes a number of measures to achieve that, particularly in respect of the LBRO's ability to issue directions to local authorities. That is subject to the strict requirement for consultation and, where more than one local authority is involved, for parliamentary approval.
	Part 1 will make a major change to the way in which central and local government can work together on this agenda, and it will deliver real and lasting benefits to organisations, business and consumers. Part 2 deals with the primary authority principle, which is important, as some nationwide firms deal with up to 400 local authorities. The Hampton review highlighted the impact of inconsistencies in the different approaches adopted by local authorities to regulatory compliance and enforcement for businesses whose operations extend across more than one local authority area. Whatever business says about regulations, one thing that it wants is clarity. Conflicting advice and inconsistent enforcement can militate against clarity and increase business uncertainty and risk. For example, a challenge to the way in which a food product is labelled in just one local authority could mean the business concerned having to revise its entire policy throughout the country, with the significant costs.
	An attempt has been made to deal with that problem through the principle of home and lead authority schemes. That has gone some way towards resolving the issues, but such schemes are still informal and voluntary, and are not always open to those businesses that urgently need them. Part 2 will therefore provide a framework to guarantee more consistent regulatory treatment of businesses that operate across multiple local authority boundaries. The primary authority principle enshrined in the Bill will ensure that where a business and a local authority have committed time and effort to developing a productive advisory relationship, there should be a presumption that advice given to that business will hold good throughout the country, except where there are good reasons for local variation.

Patrick McFadden: I am always happy to discuss such matters with local authorities.
	Part 4 will create a power for Ministers to apply a duty to regulators requiring that they keep their functions under review and do not impose or maintain unnecessary burdens. It is envisaged that the power will be used where the duty will help to promote better regulation and a more accountable approach. Where the duty has been applied to a regulator, the regulator would need to report on the action taken.
	I am grateful to the regulators who participated in our informal consultation on this part of the Bill. They emphasised that action to remove burdens must be proportionate, and that the benefits delivered must outweighs the costs. The duty therefore requires the removal of unnecessary burdens where it is practicable and proportionate to do so, and aims to deliver more robust enforcement of regulations. There is no intention to remove the protections that Parliament considers to be necessary, or to bog down regulators in a process of review that has been generated by frivolous complaints. Nor is the duty intended to apply in response to a particular decision by regulators in the competition field—for example, in such a way as to undermine decisions in competition cases. In most cases, a statutory instrument will be needed to apply the duty, which will be subject to the affirmative procedure. We know that that is a strong parliamentary safeguard.
	Provisions on this issue were refined in the other place, and the five regulators named in the Bill asked to be included in order to emphasise that the duty in no way compromises their independence. Therefore, this part of the Bill will ensure that the enforcement of regulatory protections supports the best possible framework to enable British business to compete and succeed in today's global environment.
	I draw my marks to a close by paying tribute to the hard work and expertise of those involved in scrutinising the draft Bill. The Bill has been improved as a result of that scrutiny, and the work that has already taken place to get the provisions right, which has involved businesses, the enforcement community and national and local regulators, provides a strong base for future implementation and enforcement.
	The Bill contains an ambitious package of measures which will help to boost business competitiveness and productivity in this country. That will help to maintain our position, which the World Bank has stressed, as a great country in which to do business and to invest. It will also help to create a modern, flexible and robust regulatory system that will secure the better protection for citizens that we all want. It will deliver proportionate regulation and will boost certainty and competitiveness for the honest businesses that are creating wealth day in and day out in our country. All those aspects are essential to ensure that we have a dynamic economy.

Jonathan Djanogly: Debates and Bills aimed at reducing the country's regulatory burden are always welcome to the Conservative party. However, we have been here before. Indeed, the Minister for Employment Relations and Postal Affairs and I have personally been here before, when we debated this exact issue at the time of the Government's last unsuccessful effort at regulatory reform, namely the Legislative and Regulatory Reform Act 2006—just two years ago.
	The Minister welcomed that particular piece of legislation, arguing that it gave a power to remove unwanted regulations through legislative reform orders. Those provisions, however, were themselves designed to upgrade the failed regulatory reform orders that the Government had implemented some five years earlier. Looking back, we remember that great things were predicted in regard to slashing red tape in business. On 15 May 2006—almost two years ago to the day—the Minister said that the Bill would provide initiatives on
	"reducing the administrative burdens of regulation, consolidating and simplifying legislation to make it easier to understand and work with, and deregulation."
	He continued:
	"It will also allow us to reduce administrative burdens, such as by simplifying administrative requirements for business when setting up a business or hiring staff, by ensuring that inspection is risk-based to reduce the burden on those who comply with regulation".—[ Official Report, 15 May 2006; Vol. 446, c. 719.]
	Such grand ambitions we had, back then! But did not that sound just a little bit like what the Minister predicted today? He said a moment ago that this Bill would provide lasting benefits to business, and, in his final flourish, that it would boost business competitiveness.
	Last time, the practice turned out to be rather different from the theory. By the end of 2007, when the legislation had been in force for nearly a year, it was reported by the  Financial Times that the law had yet to cut or even amend a single regulation. An update from the Minister today on the outcome of the existing package of reforms would therefore be appropriate. Perhaps we should not be surprised that, in his opening remarks, he rather interestingly omitted to mention the Government's record to date. So here we are again. Is this going to be third time lucky? Given the Government's record of failure on this issue, the Minister will understand my, and business's, caution.

Jonathan Djanogly: The hon. Lady has made her point, but if, as a Front Bencher, I were to comment on a Committee of the House, I am sure that people would jump on me from a great height.
	We welcome the stated aims of the Bill. It seeks to implement the principles of risk-based and proportionate regulation. Those principles stem from the Hampton and Macrory reviews on regulation, and were generally welcomed by all parties in the House at the time. However, we remain to be convinced that the Bill, as currently drafted, will totally achieve those aspirations. Indeed, we have many serious reservations about significant parts of the Bill, in relation to its practical operation and its legal effect.
	The Bill requires business to take a leap of faith. It proposes that regulators be awarded additional powers to sanction business, in exchange for a promise of a better regulatory environment. We recognise the concern expressed by the CBI that
	"in order to be comfortable with the awarding of these new powers to sanction business, employers need confidence that regulators will deliver their side of the bargain."
	Indeed, we are concerned that much of the Bill could put small businesses—which are already buckling under the increased corporation tax and capital gains tax burdens placed on them by the Government—at a significant disadvantage.
	The Conservative party is currently working on measures to drive out the "regulate first" culture in Whitehall, which has blossomed under this Government. This issue is very important to us. To that end, my hon. Friend the Member for Rutland and Melton (Alan Duncan), the shadow Secretary of State, has launched an independent taskforce, led by Sir David Arculus, to look into an overhaul of the regulation machine. All aspects, including the use of targets, management and training, and the vital need to address the wider cultural issues—including in the civil service—will be examined in order to make regulation the last resort rather than the first option.
	In the meantime, the Conservatives welcome the mood music coming from the Minister about the need to reduce the burden of regulation. To be credible, however, he must put this into the context of the new regulatory proposals announced by the Prime Minister last week. An example is the regulations dealing with agency workers' rights. They were released to the press yesterday without a ministerial statement being made to the House, and with no indication of their cost to business, which is likely to be huge.
	Neither we nor the business community has forgotten the record of this Government to date. Despite their manifesto promise to cut red tape, they have presided over a £65 billion rise in the cost of regulation since being elected, or the equivalent of 40 new regulations every working day. The Federation of Small Businesses has calculated that the average small business now spends some seven hours a week simply complying with Government red tape. Some people argue that this is all the fault of the EU, yet the evidence shows that, all too often, the Government gold-plate EU directives. The British Chambers of Commerce estimates that the UK's average elaboration ratio—as it calls it—for 100 directives implemented between 1998 and 2002 was 334 per cent. In other words, the Government provided three times the verbiage and potential regulation in relation to EU directives than it needed to.
	The result is that the cumulative burden of regulation is now deterring small companies from creating jobs. Over the past few years, we have seen a steady decline in the proportion of small and medium-sized enterprises that are employers. Today, seven out of 10 SMEs employ no one. As the chairman of the Forum of Private Business put it:
	"The fact of the matter is that there are no more employers than there were in 1997. This increase in the number of small firms is all about more companies without employees."
	We have heard a lot of talk from Labour before about wanting to cut the regulatory burden on business. In 2001, we saw the introduction of the regulatory reform orders, which, we were told, would transform the process and lead to the scrapping of thousands of regulations. Yet the reality has been somewhat different. In 2005, the Cabinet investigated progress. In four years, Ministers had managed to identify only 63 possible laws that they were willing to tackle. Worse still, of those, they managed to implement only 27. Given that over the same period, there were more than 12,000 new statutory instruments, that was a dreadful indictment of Ministers failing to deliver on their promises.

Jonathan Djanogly: Possibly, but the extent to which that is the case needs to be looked at further in Committee. People ask why the Bill introduces a super-regulator to regulate the regulators, which is another issue for careful consideration in Committee.
	Thirdly, we are concerned about the precedent that clause 7 represents. As far as I can tell, the Bill would allow for the first time an unaccountable body to have the ability to turn mere guidance into direction—and not just its own guidance, but that of five other regulators, including the Health and Safety Executive, the Environment Agency and the Food Standards Agency. Until now, that power has been in the hands only of a Secretary of State, accountable to this House, and only for exceptional matters. This is a very substantial change, about which we still have significant concerns.
	Part 2 is designed to establish "primary authorities" so that businesses operating in more than one local authority area can choose to be regulated by a single authority. We understand the concern of many small businesses or business organisations that the measure could unfairly create two regulatory regimes: one for larger firms and one for smaller firms. Thus, a large store would be able to choose who it would like to regulate it. Given the number of outlets, that would make it a very substantial contract and the chief executive officer of that large store would no doubt wish to work with, say, a pragmatic business-friendly Conservative council offering the most efficient, least bureaucratic regime. So far, so fair. However, where does that leave the local convenience store in the business-unfriendly council area? As a small shop with one outlet, it has no choice. It will have to be regulated by the local regulator, and if it is badly run, it may be at an immediate disadvantage.
	Equally, there is considerable potential for consumer confusion and bureaucratic dispute. If a complaint is made against, say, a store in one city, but the same store has chosen to be regulated by a different local authority, to whom do consumers complain and how can they be sure their complaint will be pursued? There are some serious issues to be debated.
	Without significant levels of intervention from the LBRO, the system may not work. In order to make certain that there is consistent application of regulatory activities by local authorities, we need seriously to consider the suggestion that the LBRO be given powers to ensure that authorities that do not demonstrate adherence to the Hampton principles are called to account.

Jonathan Djanogly: I am sure that the Government will bear that in mind in their subsequent negotiations with business.
	We also share the concerns voiced by the British Retail Consortium that the powers given to primary authorities to ensure co-ordination of regulatory enforcement have been much weakened since the recommendations of the Hampton review. As the Bill is currently drafted, local authorities must only "have regard" to an inspection plan agreed on by a business and a primary authority and endorsed by the LBRO. We should fear even more red tape if a primary authority can ignore an inspection plan that has been both costly and time-consuming to draw up.
	The decision to allow primary authorities to charge for their services also rings legitimate alarm bells for businesses, which, of course, already pay for enforcement services through their local rates. If they used the primary authorities, could they be subjected to a regime of double taxation? Unless the powers of the primary authorities are bolstered, businesses may see them as just another unnecessary extra expense. We look forward to debating our concerns about this part of the Bill with Ministers, and establishing just how far the Government have thought it through.
	Part 3 gives regulators a wide range of powers and sanctions, often involving fines, which can be imposed without recourse to the courts. We do not oppose civil penalties per se, but we feel that we should review the extent to which they should be restricted. As drafted, the Bill specifies no such restriction. Nor are the new powers being granted to a handful of public bodies; they are to be granted to a total of 27 different designated regulators, who will be able to fine in relation to offences arising from more than 140 enactments listed in schedules 6 and 7.

Sarah Teather: As I was listening to the previous speeches, I could not help thinking that this is perhaps the first time I have debated something other than post offices with the Minister. Therefore, this must be a moment of light relief from his usual diet of at least six post office Adjournment debates a week.
	As the Minister said in his opening remarks, this Bill was born out of the recommendations of two reviews. The Hampton review focused on the need for regulation to be risk-based and proportionate and looked at the scope for reducing regulatory burdens on business, and it identified the need for better co-ordination between regulators and for less duplication.
	Of the two reviews, the Macrory review, if fully implemented, will probably have the greater impact on the practice of regulators. It recognised that much current enforcement is not effective in changing the behaviour of businesses and recommended a shift to the use of civil sanctions, including fixed penalty notices, as well as many more innovative ideas such as restorative justice and new criminal sanctions.
	Inasmuch as the Bill recommends greater co- ordination between regulators and the use of civil sanctions as a quicker means, in certain circumstances, of changing the behaviour of businesses than lengthy processes through courts, I and my party will support it. We support the premise of the Bill; we are signed up to the intention behind it, and we will support it on Second Reading. However, we still have doubts about whether all the detail in the Bill will result in the changes of behaviour that the Minister hopes for, whether some of the sanctions proposed will increase or decrease the regulatory burdens on business, and whether there is adequate understanding of the role of local authorities in the prescriptions for the regulator. We will want to explore such matters in Committee—some for clarification alone, and some for amendment.
	I recognise, however, that the Bill did change during its passage through the other place, which is welcome. The requirement for criminal levels of proof before making civil sanctions is a good step, as is the decision to set out in the Bill a requirement for an appeals procedure, although its full implications need to be further explored in Committee. The agreement that the Minister should satisfy himself that a regulator is essentially Hampton-compliant before it can receive any further penalty powers is also broadly to be welcomed, although I would like to explore in Committee how that Hampton-compliance is to be assessed.
	Most welcome, however, was the acceptance of a need for a review of LBRO's operation after three years. I hope that this change signals the Government's conversion to the principle of sunset clauses. For some time the Liberal Democrats have argued that one of the most effective ways of ensuring that we do not increase the regulatory burden on business without clear benefits would be to have a sunset clause on new regulations, whereby each new regulation came back to the House to be approved and we decided whether the regulation needed to be in place now or whether its time had passed.
	The key principle of good legislation is that it should be easy to enact. Those being regulated need to understand why they are being implored to behave in one way or another, and they need easily to be able to find out whether they are operating within the law.

Mark Pritchard: I am grateful to be called in this debate, Mr. Deputy Speaker. First, may I apologise to the House for the fact that, unfortunately, because of a prior commitment, I will not be present for the winding-up speeches?
	The Government are very much a Johnny-come-lately to deregulation. I have touched on the irony that the Bill creates more regulation and legislation in order supposedly to reduce regulation. By that very fact, and by their previous form in this area, the Government are very much the worst offender and they set the worst possible example to the nation at large and to large, small and medium-sized businesses.
	Given that other hon. Members wish to speak, I shall limit my remarks mainly to small businesses and the Bill's potential impact on them. Small businesses are the lifeblood of the British economy; more than 95 per cent. of businesses in this country are small businesses of 25 or fewer employees. Without such businesses and hard-working small business men and women, the British economy, and the economy in both my constituency and the fine county of Shropshire, would grind to a halt.
	Yet, small businesses are increasingly feeling the tightening of the regulatory noose and the big foot of Government trampling over entrepreneurship and innovation. What business men and women tell me—they mostly do so privately—both in my constituency and as I travel in different parts of the country is that they want Bolshoi light touch regulation, rather than the trampling big foot of Government. Regulation is not a bad thing in itself per se; it is not intrinsically wrong and it has an important role to play both in the private and public sectors—for example, in food safety, consumer protection and environmental health. However, many businesses feel that many regulations are unnecessary and burdensome, and they distract business people from their core raison d'être: creating jobs and investing in communities.
	Money and profit have been mentioned in this debate, and there is nothing intrinsically wrong with them. If businesses are not profitable, they cannot grow, expand or employ people. If people are not employed, they do not have the disposable income that they need to go on holiday, to look after their families in the way that they want or, in this day and age of high food prices, to put a loaf of bread on the table. We should not confuse the important issues of profit and business, and the other social factors to which hon. Members referred.
	It is not just Members of Parliament, either Conservatives or those in other parts of the House, who are aware of the burdens; the Federation of Small Businesses, the CBI, the Institute of Directors, the British Chambers of Commerce all testify to the fact that burdens on, and costs to, businesses are increasing, rather than decreasing. The CBI has said that since 1997, when this Government came into power, £55 billion-worth of new burden on business has been added. That is a huge sum, and clearly many casualties have resulted. Perhaps the Minister might tell us what research has been done with Companies House on the number of businesses—not only those that have gone into receivership, but those that have voluntarily wound up and have closed their companies—that have closed as a result of regulation and red tape.
	Although I agree with many of the Bill's sentiments, I am concerned that, once again, we are having more law, rather than better law. The Minister must answer another question: given that local authorities enforce about 80 per cent. of regulations and licensing procedures, and given that the need for enforcement continues to grow across the spectrum of various regulations, does he feel that those authorities are adequately and appropriately resourced to be given a greater role?
	I am a member of the Select Committee on Work and Pensions, which recently reported on benefit simplification and found that there is still too much complexity in the benefits system. That is relevant, because Government need to set the right example—if Departments cannot do so, how can they expect small businesses to do so? The Government need to apply not only a light touch, but a lot more common sense.
	I welcome many of the parts of this Bill, and many of the concessions and amendments made in another place. However, as it stands, the Government are not going to note the flaws that my hon. Friend the Member for Huntingdon (Mr. Djanogly) has rightly pointed out, and the Bill will remain a mess. I do not think that we will be able to support it in the way that the Government would want.
	The suggestion that this Government will cut red tape and deregulate is as likely as the Prime Minister performing at a comedy club. If the Government are serious about this issue, they will listen to the concerns of my hon. Friend and of small businesses. It would be helpful if we had more Labour Members from a business background, but unfortunately very few are. I declare an interest as a former businessman, and my hon. Friend for a Northamptonshire seat—

Mark Pritchard: There are so many good MPs from Northamptonshire that I was confused. As my hon. Friend for Wellingborough rightly said, every burden placed on small businesses carries a cost. That cost is not always necessarily financial—although often it is—because it can be in time, with staff distracted from the key issues of running their business, employing people and investing in communities. I hope that the Government will rethink their position on many aspects of the Bill.

Peter Bone: It is a pleasure to follow my hon. Friend the Member for The Wrekin (Mark Pritchard), who made a powerful speech today, as he did yesterday. I need to declare an interest—I refer Members to the register—as I am a director of a small company. I am also a member of the Institute of Chartered Accountants in England and Wales.
	I am delighted to speak in this debate because of my personal background. I came to the House of Commons late in my career, mainly because the public kept rejecting me— [ Interruption . ] That is another issue. However, that allowed me to extend my business career. I started a company and went through all the traumas of growing it. Eventually it became a plc, and we sold it on and I started a new company. So I have some personal knowledge of the problems of regulation in business.
	I have one story, about VAT inspection, that will illustrate some of the problems. At the time, my company was only small, with five employees including me. We were told that we were to be inspected by the VAT man. We were told the date, and we did an enormous amount of work laying out the books. Unfortunately, on the day there was heavy rain. The inspector was due at 9 am, but still had not turned up by 10, so we rang up, to be told, "Oh, he's not coming, Mr. Bone, because it's raining so hard." That is the sort of thing that drives owners of small companies mad, but they have to put up with it. We were not even inspected afterwards: the inspection was abandoned. It felt like inspection for the sake of inspection.
	Much of the merit of the Bill is that it would target rogue traders, or possible rogue traders. The Hampton review stated:
	"During 2003...the local authority trading standards officers only inspected 60 per cent. of high risk premises in Great Britain, in 35,000 inspections, yet still inspected 10 per cent. of businesses classified as low-risk, in over 72,000 inspections."
	I understand that the Government now intend that high-risk businesses should be inspected more frequently, but they have not said that they will not inspect low-risk businesses. If high-risk businesses are to be inspected at the rate that the Government suggest, we should be able to reduce the number of inspectors. Do the Government have a target for the reduction of inspectors every year, so that we can see that the decrease in regulatory inspections is actually occurring?
	When I worked in business, I was also driven mad by conflicting advice from regulators. An inspector told us how to operate a VAT system for our travel business, but then three or four years later, another inspector came along and said that we had been doing it wrong and that we would be fined. We argued that we were doing what we had been told to do, but no, we had to pay the fine and change how we did things. As it turned out, we did not mind paying the fine, because the new way of doing things saved us an enormous amount of VAT. However, that should never have happened, because the procedure should be made clear to businesses. If the Bill helps to improve that, it should be welcomed.
	The real problem is not the implementation of regulation but the fact that the Government create regulation at an enormous rate of knots. I have three ideas for cutting back on regulation. First, we should get rid of the regional assemblies. According to a left-wing think-tank, they cost taxpayers £360 million a year. They do not do anything, so we should get rid of them. Secondly, we should abolish planning appeals. Local elected councillors should be able to decide the merits of a planning application, and that would save millions of pounds. Thirdly, I cannot find anyone who thinks that the Standards Board for England is a good idea, so we should get rid of that. If the Government were proposing such measures, we might believe that they wanted to cut regulation.
	The proposed LBRO—it does not have a very good title—should be extended. Why not have it cover the whole of government, not just local government? Why not call it the department for administrative affairs, and build up a big empire? Why not employ lots more civil servants to cut regulation? We could find a Minister to do that—perhaps a chap called Jim Hacker. This is straight out of "Yes Minister". The Bill will create a body that will cost £73 million a year and employ huge numbers of bureaucrats, with the idea of saving money.
	Another thing that used to drive me mad when I was in business was getting a letter from a Government organisation with no date or address, or with an illegible signature. I have a copy of the impact assessment by the Department for Business, Enterprise and Regulatory Reform—the second version, although I do not know why there were two—and the Minister's signature of approval is a squiggle, so I have no idea who it was. The name of the Minister who signed off on this document should at least be printed on it. Of course, the Minister may not want to be identified, because of the problems with the impact assessment.
	We are told that the Bill will save businesses a lot of money, and the impact assessment contains some very good figures. The LBRO will cost £73 million a year, although that is a Government estimate, so we can at least double it. Let us call it £146 million for a start. The annual benefit to business, according to the impact assessment, will be £200 million, so we can halve that to get the right figure, so it will be only £100 million. The result is a net loss of more than £40 million a year.
	The impact assessment goes into detail about the different costs between local authorities and businesses. One very telling argument is the fact that the impact assessment says that the cost of the new department to local authorities is £13.6 million a year, which will provide a saving of between £14.2 million and £17.9 million a year. That is hardly any saving at all.
	Everyone knows that local authorities are the most inefficient part of the whole system. They are far more inefficient than private businesses, but the Government are going to make a change that will cost the local authorities £13.6 million in order to save between £14.2 million and £17.9 million. We are told that it will cost businesses only £7.5 million, and that there will be a saving of between £59 million and £86 million a year.
	I do not believe any of it. If we review the situation after three years—I am grateful for the remarks made by the hon. Member for Brent, East (Sarah Teather) on that subject—I do not believe that we will find anything other than a glorious empire with a Jim Hacker-type figure at the top and lots of people sending out lots of bits of paper, which will cost a huge amount of money and not save a single penny.

Peter Bone: Of course, that is entirely correct. Unfortunately, they are not allowed to. That is the point. One cannot change an EU directive. It might say that there needs to be a penalty for this or that, but that one could not do something else, either. The three provisions might not tie up, but we could do nothing to change that. The hon. Member for Stone (Mr. Cash) made this point earlier. We are not just banging on about Europe. British businesses have genuine concerns. Although Government regulations tend to be very clear, as they have gone through the process of scrutiny in the House and the Joint Committee on Statutory Instruments, the numerous European regulations cause the greatest concerns.
	The impact assessment said that the change would in no way help competition. I do not understand why, if we are trying to improve regulation, competition will not be improved for businesses. The Minister for Employment Relations and Postal Affairs said earlier that he could not say how many fewer prosecutions there would be, yet the impact assessment states that there will be 22,500 fewer. When he sums up, will the Under-Secretary address that clear confusion? Such a reduction in prosecutions would, of course, be welcome.
	My final point, which goes to the heart of the issue, concerns the effect on small businesses. We know that 99 per cent. of enterprises are small, that 47 per cent. of enterprises employ 36 per cent. of the total work force—or rather, they employ a higher percentage of the total work force and account for 36 per cent. of all turnover. It is small businesses that encounter the problems with regulation and its interpretation.
	I accept that the Minister comes to this subject with a genuine desire to reduce regulation, but unfortunately they are creating something that will make it very easy to impose fines without reducing regulation or the need to interpret it. I see this as an empire-building process, and I am concerned that the office will go down the route of the fictitious department of administrative affairs.

Graham Stuart: Or sooner, as my hon. Friend says.
	I am supportive of the stated aims of this Bill. Proportionate regulation is to be welcomed. I remain to be convinced that the Bill, as drafted, will meet its own aims.
	The Bill's aims have their genesis in the Hampton and Macrory reviews. Hampton, for example, found that the diffuse structure of local authority regulatory enforcement increases uncertainty and administrative burdens for business. Few could argue with that.
	I should like to take a few minutes to look in detail at the Bill and its flaws. The Hampton review found that unco-ordinated action means that businesses receive unnecessary inspections and conflicting advice, while a lack of communication between local authorities results in a duplication of effort. Part 1 intends to address those problems by establishing a local better regulation office with the objective, to paraphrase the explanatory notes, of ensuring that local authorities exercise their relevant functions in a manner that is effective and efficient and complies with the Better Regulation Commission's principles of good regulation. Those principles are that regulatory activities should be exercised in a way that is transparent, accountable, proportionate and consistent, and that they should be targeted only at cases in which action is needed. In short, the LBRO is to be a "regulator's regulator".
	All too often regulations are enforced in a way that shows no regard for the risk. Not unfairly, trading standards, environmental health and licensing inspectors are regarded as inconsistent and over-zealous. Anything that we can do to change that should be welcomed.
	I shall not bore hon. Members with the tedium of the fine detail of the workings of the LBRO. My colleagues in the Lords have done sterling work in securing amendments that will help its operation, but neither they nor I—nor indeed the Minister—can ignore the fact that the establishment and operation of the LBRO seems a hideously complex way of improving the way local authorities regulate. If local inspectors are the problem, is not the answer to reform the rules that they are enforcing and then retrain and manage them to achieve improved outcomes?
	As the Minister said, the LBRO will be a small organisation taking on the clout of over 500 big regulators spread across the country. However laudable its aims, we must question its ability to take on the might of those who like to overuse the few powers in life that they enjoy.
	Part 2 attempts to introduce a degree of competition between local authorities in the enforcement of regulations. Any regulated person who carries out an activity in the area of two or more local authorities will be able to nominate which body regulates him, and that body will then be that person's primary authority. That will mean, for example, that such a person need not be subject to enforcement from more than one trading standards authority. One might think that that is fair enough. I recognise that differing interpretations of the same regulations create a major additional burden for businesses. Indeed, I should like to know whether the Minister's Department has measured the cost of that burden.
	If this Bill is passed, Labour-controlled councils might find themselves doing a lot less regulatory work. Just as voters did at the start of the month, the chief executives of big firms will vote with their feet and opt to be governed by Conservative councils that have an understanding of business. That is all very well for big businesses that will be in a position to do that. Indeed, it is to be welcomed. Consistently enforced regulations mean less uncertainty and a reduced regulatory burden, but what about the small shops—"Hutton's Haberdashery", or "John's Jewellers"? They will be stuck with the same old regulators and, in Labour areas, all too often the same old over-regulation.
	Equally, there is considerable potential for consumer confusion. As my hon. Friend the Member for Huntingdon (Mr. Djanogly) noted, if a complaint is made against a store in, say, Barrow and Furness that has chosen to be regulated by a different local authority, to whom do consumers complain, and how can they be sure their complaint will be pursued? I shall be interested to hear about that from the Minister who sums up the debate.
	My fear is that part 2 will help bigger businesses while making no difference to small shops and punishing consumers, but I also have another concern about it. The decision to allow primary authorities to charge for their services will not play well with businesses that already pay for enforcement services through their local rates. Businesses using the primary authority system will be subjected to what is essentially a regime of double taxation.
	The Macrory review made recommendations aimed at ensuring that regulators have access to a flexible set of sanctioning tools that are consistent with the risk-based approach to enforcement outlined in the Hampton review. Many regulators are heavily reliant on criminal prosecution as the main sanction, but the Bill provides for civil monetary penalties. Let us be clear: we are talking about a system of fines that can be imposed without recourse to the courts.
	I do not oppose civil penalties, but I feel that we need to review the extent to which they should be restricted. As drafted, this Bill contains no such restriction, and a total of 27 designated regulators will have the relevant powers. The Minister who opened the debate unfairly compared the subjective assessments made by Companies House of how a business is run with the instant fines introduced by the previous Conservative Government for people who do not achieve the clearly objective and easily measurable task of submitting their accounts on time. I hope that the Minister who winds up the debate will say how much leeway the Public Bill Committee will have to restrict those powers and give businesses, especially small ones, some reassurance.
	As Lord Lyell of Markyate stated on Third Reading in the other place, the provision in effect gives the regulators the power to be
	"investigator, prosecutor, judge, jury and sentencer"—[ Official Report, House of Lords, 28 April 2008; Vol. 700, c. 26.]
	He has much more legal standing and experience than either I or the Minister, and we should take his words seriously. Earlier, we considered the fact that the right of appeal does not negate the basic accusation made against the new system. The British Retail Consortium says:
	"We opposed the introduction of administrative penalties for the very reason that we believe these...could result in a parking fine style system of enforcement."
	That point was made earlier. Wide powers relating to a long list of offences are being granted to a large number of unaccountable regulators; that combination could be disproportionate and unnecessary.
	I support the stated aims of the Bill, but it does not come close to meeting those aims. The LBRO—the regulator's regulator—is small and weak. All the signs are that it will be ineffectual. The provision for primary authorities may help bigger businesses that trade across the country, but it will not help small shops or, crucially, the consumer. Instead, it will lead to consumer confusion.
	The Bill attempts to force regulators to enforce regulations in a more measured way, but the civil sanctions section of the Bill will help to foster a traffic warden culture across 27 regulators. Inspectors are elevated to the status of judge and jury. The Government continue to heap regulatory burdens on business. The regulatory impact assessment for the Pensions Bill estimates that the cost of regulation stemming from that Bill alone will exceed £230 million. What estimate has the Minister made of the total cost of regulations associated with the Bills set out by the Prime Minister in the draft Queen's Speech?
	Just six months before he became a GOAT, or member of the Government of all the talents, the Minister for Trade Promotion and Investment, Digby Jones, told  The Daily Telegraph:
	"Red tape is what governments do...I am on businesses' side: I'm trying to pull it off without regulation...Otherwise they WILL get the clunking fist."
	The Bill does nothing to change the proliferation of regulations that stifle business. How many more botched regulation-related Bills can we expect from the Government before we get real change?

Charles Hendry: This has been a significant but relatively brief debate on an important piece of the Government's legislative agenda. Indeed, the legislation is perhaps the most important Bill for business this Session. However, I think that business representatives watching the debate will be disappointed when they see how few Members of Parliament have turned out to participate in it. They recognise that regulation is one of the most important issues affecting the success of their companies and of UK plc, and they will simply not understand why hon. Members have chosen not to be here to speak up in the interests of businesses in their constituencies. It is important to send the message that the debate deserved better attention.
	As many hon. Members have said, it sounds as though the Bill is a step in the right direction, but as we have heard, the Government's track record on regulation is so bad that we have to be sceptical about their intentions. The fundamental issue when it comes to regulation is that the Government simply cannot stop meddling. They believe that they know how to run every business better than the business man, every school better than the head teacher, every doctor's practice better than the doctor, and every voluntary organisation better than the people who have run it for years. They simply cannot keep their hands off. They feel that they need to get involved because they alone have the unique skills necessary to make things run efficiently.
	The Government always talk about better regulation when they should be talking about less regulation or deregulation. The belief that regulation and interfering are important runs right the way through the Government, but that is not the right way to go. It was notable that when the Department for Education and Skills, as it then was, issued guidance to schools on how to tackle bureaucracy, the document ran to two volumes, because the Department could not make it clear in one volume. As we have heard from the British Chambers of Commerce, we get 14 new regulations a day from the Government—that is £66 billion in extra costs to business. We heard that HSBC, one of the biggest banks in the world, has to face 370 regulatory bodies around the world. We live in an incredibly regulatory environment.
	It is right to ask:
	"How can an enterprise economy break through when the government presides over systematic, stifling red tape, a discredited planning regime and a society that becomes more politically correct and risk averse by the day?"
	Those are not my words, but those of Sir Digby Jones, spoken when he was director general of the CBI. He is now better known to us as Digby the Baron Jones of Birmingham. We always thought that that was the correct form of address for a dowager duchess, but that is how he wishes to be known. He highlighted the issue of regulation before he came to Parliament to sit in the other place. It is of little surprise, therefore, that he is not the Minister taking the Bill through its stages in the other place. I think that he would have found it hard to resist saying that we are over-regulated and need to do more about it.
	The Minister talked in enthusiastic terms about the work that the Government have been doing on deregulation, but why are all the representations that we receive from business and other organisations about the pressures that they face as a result of regulation, and the fact that they are regulated too much? Why are we told that the average cost to UK business of implementing new legislation is £133,340 a year? Why does the Federation of Small Businesses tell us that the average small business spends seven hours a week complying with red tape and on paperwork? Why does British Chambers of Commerce estimate that by the time Ministers have taken directives through the system to make them apply to UK law, the cost is increased threefold?
	There is too much regulation. The approach identified in the Bill begins to scratch the surface, but it does not address the underlying problem. As we heard from my hon. Friend the Member for Huntingdon (Mr. Djanogly), in four years, only 63 measures were identified under the regulatory reform orders, although the orders were to be the Government's vehicle for addressing the problem. Only 27 of those 63 have actually been dealt with.
	Business in this country faces competition as never before. There was a nice, convenient thought that China would pose a threat to us only on the cheap, dirty side of manufacturing—that was never the way in which we saw manufacturing, but that was the perception. Nobody truly realised China's ambition to do high-value, high-end work, too. Business was initially attracted overseas by low labour costs. Now, it will go overseas to pursue cheap energy. A key factor in determining whether businesses decide to stay in this country or move overseas is the regulatory environment.
	It is a matter of profound concern that companies such as Shire—one of the biggest pharmaceutical companies—are looking to move offshore. WWP is, I think, the biggest advertising and marketing agency in the world; it, too, is moving offshore, and others are talking about doing so. They think that what was special about Britain is being lost, and that other countries offer a more attractive environment in which to do business. What they need from the Government is work done to tackle skills issues, so that the graduates and school leavers who come through the system have the skills that the companies need.
	Businesses need tax rates to be addressed, too. In Prime Minister's Question Time, it was disturbing to hear the Prime Minister criticise us for saying that corporation tax needs to be dealt with. He said that that was the wrong sort of problem to raise. Above all, there is the issue of regulation to be addressed. Every single business that we visit in our constituencies tells us that it is over-regulated, and that it is wrong.
	We have heard some expert and well-qualified speeches. It is notable that we five Conservative Members who have spoken have all run our own businesses. We have gone through the pain; we know what it is like when a person sets up a business and feels that the world is against them, even though their motivation for going into business was that they had an idea and wanted to provide a service to the community or a business audience. They end up feeling like some sort of criminal if they do not get their VAT form in bang on time. The approach towards business does so much to stifle it. Many people would never have started their own business if they had known how difficult it would be.
	My hon. Friend the Member for The Wrekin (Mark Pritchard) is right to tell us that regulation is not bad per se. Many regulations are good for business and for Britain. The problem is identifying and removing the ones that are not good and are counter-productive. He was right to say that we need to know the answer to the question of how many businesses have closed as a result of bad regulation.
	My hon. Friend the Member for Wellingborough (Mr. Bone) said that he was rejected by the electorate on a number of occasions. That rejection meant that by the time he entered the House, he was a more expert, well-qualified MP than he would otherwise have been. We are lucky that he is here to bring that expertise to the House and to our considerations today. He talked about the sense of frustration that business has about bad regulation, and he did so with immense feeling and understanding, because he has been there himself, and has run businesses for 20 years.
	My hon. Friend the Member for Beverley and Holderness (Mr. Stuart) rightly sounded sceptical about parts of the Bill; again, he has experienced the consequences of over-regulation first hand. He asked a whole range of sensible, practical questions—so much so that they almost amounted to a request to go on the Committee for the Bill. We will need such detailed analysis as the Bill goes through its stages.
	My hon. Friend the Member for Stone (Mr. Cash), whom I am glad to see in his place, talked about the relationship with the European Communities Act 1972. Ministers talk about leading the way in cutting down administrative burdens, but one of the greatest frustrations for business is that a small directive from Brussels ends up as a long regulation that comes out of a Department.
	If we want to tackle the culture of over-regulation, we need to start with Ministers. They need to say what European regulations and directives say and that they will not add anything to them. If that does not stand up, it will be the failing of the directive. We should not use directives as an opportunity to gold-plate and add on bits and pieces to allow officials, who I know are well meaning, to tag on a little bit that they have been tucking away in a drawer, hoping for a suitable directive that they can latch it on to. Ministers have to be robust in rejecting that approach and saying that the directives that come from Brussels should be exactly that, and not become a vehicle into which more bits are added.
	On the elements of the Bill itself, we owe a great debt of gratitude to Philip Hampton and Richard Macrory for their work, which has identified practical and important considerations. However, as we have heard, questions need to be answered today, or certainly in Committee. The talk about the local better regulation office sounds alarm bells. It may be well intentioned, but we have seen too often that what starts as a well-intentioned initiative grows out of control. We can imagine that in a little while the Minister will say, "Well, the local better regulation office is working so well that we will have regional better regulation offices as well. Then, to make sure that it all comes together, we will have a national better regulation office." An entire new arm of bureaucracy and administration would be set up. That is not the way in which we should be going.
	We also want to know how the new body will prevent over-zealous implementation. The businesses in our constituencies often tell us that the problem is not regulation, but how it is interpreted by people from health and safety and Government Departments. A company in my constituency told me of its experience. Every year, it took on people from the local community college for work experience. A couple of years ago, health and safety representatives told it that it could not do that any more because it was a dangerous environment in which to work.
	I am talking about a retail establishment. First, its management were told that the young people could trip up and down the step in the shop as they were carrying things around. Secondly, there was—even more dangerously—a till in the establishment. I did not think that unusual in a shop. However, if a young person was bending over when the till opened, he could be hit on the head. The health and safety representatives refused to allow the shop to offer work placements to people at school. That was not down to regulation; no regulation anywhere in this country says that children should not work near tills. It was a case of an over-zealous inspector, who damaged both that business and the aspirations of young people.
	My hon. Friend the Member for Wellingborough talked about inspection for the sake of inspection. The underlying problem is that as a society we are becoming too risk-averse—we are trying to eliminate the downside and risk. Risk, however, is part of an entrepreneurial, successful society, and if we do not encourage people to take sensible, calculated risks, we will damage our opportunities to deliver the growth and economic success that we want.
	Part 2 of the Bill relates to the primary authority. We need to know from the Minister how it will ensure fairness for small businesses and a level playing field with big businesses, which can choose where they are regulated. Take the example of two neighbouring shops—one is large and regulated remotely, perhaps hundreds of miles away, and the other is regulated locally. How can they both be on a level playing field, given that they are accountable to different primary authorities? We need greater clarity on that.
	We also want clarity on part 3, which is about civil sanctions. We welcome measures that track all rogue traders. We know the problems, headaches and pain that such traders cause our constituents and we want tougher action against them. However, as a result of the Bill, 27 different regulators—an awful lot—will be given the powers to impose civil sanctions. How will we stop the tendency for them to go for easy pickings and focus on smaller businesses that will not appeal? The regulators may use the full force of their powers against such smaller businesses, but not against the more serious offenders.
	The comments of the noble Lord Lyell of Markyate have been cited. He said that the regulators would be the investigator, prosecutor, judge, jury and sentencer. In British law, we are not familiar with that concept, which represents a completely different approach from that of the legal system that we have had in the past. Perhaps the Minister can tell us whether there has been a precedent. The issue causes understandable concern.

Gareth Thomas: I will come to the hon. Gentleman's points about the impact assessment.
	The hon. Member for Brent, East made a series of points, some of which I am sure she will want to raise in Committee, but one or two of which I will refer to in this debate. The hon. Members for Huntingdon and for Wealden made a series of important points about the Bill, and I hope that I will be able to address some of their concerns. No doubt its passage through Committee will provide further reassurance to them. I have to say, however, that when they veered away from the specifics of the Bill, they made a series of intemperate and inaccurate comments about the current business climate. The business community will view with considerable scepticism lectures from them and other Conservative Members about the problems that it faces, when their party was responsible for two massive recessions in the 1980s and 1990s, in which business after business went to the wall, job after job was lost and many businessmen and women lost their homes and considerable amounts of money as a result. They might think that the business community has forgotten what it was like to operate under a Conservative Government—I think that they will be sadly mistaken come the next election.

Gareth Thomas: Perhaps I could encourage the hon. Gentleman to talk to the business community, which welcomed the move. He suggests some scepticism about the benefits of that measure—let him talk to the business community, which actively supports it. While the hon. Gentleman is talking to the business community about that measure, he might like to ask about the revelation from my hon. Friend the Member for Amber Valley that Conservative Members have not been diligent about turning up to discussions in the Regulatory Reform Committee.  [ Interruption. ] I welcome the attendance of the hon. Member for Beverley and Holderness in this debate—I hope that he will take up the issue of poor attendance on that Committee with those on his Front Bench.
	The business community has made a series of supportive remarks about the Bill. The British Retail Consortium, for example, strongly supported the establishment of the LBRO, saying that it thought it vital that the LBRO should have full and effective powers right from the start. The consortium saw one of the office's key roles as bringing reluctant authorities up to standard. The national policy chairman of the Federation of Small Businesses, Mr. John Walker, made it clear that ensuring a clear and consistently fair system throughout all local authorities is a "must have" for the small business sector. He went on to say that the anticipated reduction in cost to businesses means that this is a positive development and welcomed the creation of this new body. The Institute of Directors, too, welcomed the proposition that a wider range of penalties would mean less use of criminal sanctions, and less time and money being spent on court procedures. The Federation of Small Businesses said that it supported the use of alternative sanctions rather than the use of criminal prosecutions, which it thought—as we do—should be reserved for only the most egregious offenders and offences.
	Several hon. Members expressed concern about what the LBRO would do for smaller businesses. Its objective is to promote better regulation for all businesses, regardless of size. We believe that all of its functions under part 1 will help to lighten the burden of regulation on small businesses. For example, where small firms operate in more than one local authority area, they will have access to the primary authority scheme that is enshrined in part 2 of the Bill. For instance, a car dealership operating across several councils or small businesses that are based on internet sales could benefit from the scheme. I suspect that is why, during consultation, small businesses were concerned to ensure that the primary authority scheme did not divert resources away from their support towards bigger national firms.

Graham Stuart: It is a pleasure to be in the House this afternoon, knowing that because the Government business has already been completed, the Under-Secretary, other hon. Members and I have until 7 o'clock this evening to discuss the case of my constituent, who was so unfairly treated about his farm payments.
	The Rural Payments Agency's handling of the single farm payment scheme is well documented. As a Member of Parliament for a rural constituency with a proud farming tradition, I know only too well the strain that that put on families and businesses over the past few years. Many farmers across the country have been forced out of operation, many took on large amounts of debt, and all have come to regret the administrative incompetence of the Ministers who were then in the Department. Rural communities distrust the Labour Government. They are not convinced that the Government understand, or take any interest in, their way of life, and many have lost faith in their ability to improve things.
	I hope that that is a source of regret for the Minister, but I suspect that after the foot and mouth outbreak, the cuts in flood defences before last year's floods, and the failure to distribute awards from the single farm payment scheme on time, he is not especially surprised. I hope, too, that he is embarrassed by the failings of the RPA, which is guilty of staggering incompetence. The conclusions of the National Audit Office report on the delays in administering the single farm payment scheme in 2005 say it all:
	"The Department and the Agency had not fully appreciated the risks and complexities involved in implementing the English model of the single payment scheme. This was, in part, due to a lack of common understanding of the scheme requirements and likely customer behaviours across all key teams within the Department and the Agency."
	Whereas Scotland, Wales and most other EU countries opted for payments calculated on the historic basis of claims made by individual farming businesses between 2000 and 2002, England adopted the so-called dynamic hybrid model. I am sure that the Minister who is here tonight would have made different choices, but the Ministers who were there then made that choice. Whereas most Scottish payments were made on time, thousands of English farmers were made to wait. Although the target was to pay 96 per cent. of all money due to farmers by the end of March 2006, by the end of June 2006, 8,586 farmers had not received any money, and 16,168 farmers had received only partial payments amounting to 80 per cent. of their claim.
	The result was widespread despair and frustration among members of England's farming community. Some 20 per cent. of those surveyed by the polling company Ipsos MORI said that the delays had caused distress and anxiety to them and their families. The NAO estimated that the delays cost farmers between £18 million and £22.5 million in interest and arrangement fees on additional bank borrowing. Its report stated that some farmers had
	"postponed purchases, sold crops and livestock early or delayed payments to their suppliers."
	Only in this Government could the Minister who presided over such a situation be promoted to the post of Foreign Secretary.
	The purpose of today's debate, however, is not to slam the Government for past misdemeanours but to set out for the Minister the case of Sam Walton, a farmer constituent of mine. Mr. Walton has, in my opinion, been the victim of an injustice at the hands of the Rural Payments Agency. I gave the historical backdrop by setting out the way in which those payments were introduced to provide an idea of the way in which the agency ran its major project, and it is fair to do that before I deal with the way in which rules were rigidly applied to a small farmer in distress.
	The injustice that Mr. Walton suffered has led to his losing out by more than £5,000 each year—a huge sum of money for farmers in today's difficult climate. He has gone through the necessary judicial procedures to retrieve the money, and has got nowhere. As a final resort, he contacted me, and asked me to bring his case before the House. I hope that the Minister will give him a fair hearing this afternoon, and I am confident that he will. Sam Walton is a farmer of long standing in my constituency, and he is highly regarded in the East Yorkshire rural community. He has been farming at his home in the tiny village of Lockington since 1973. During that time, he has built up a plot of land totalling more than 170 acres, and he has become editor of the magazine  Pig World. His main source of income for the past few years is cereal and rapeseed, as he no longer handles any livestock.
	Mr. Walton's troubles began in the year 2000-01, when he contracted with a company to grow beans on his land. The company decided to pay him for that work up front. As a result, it alone collected that year's arable area payment—some £100 per acre. It was a wise decision for Mr. Walton to collect the money before the work was completed. In 2001 he contracted with the same company to grow winter barley. This time no money was collected up front, and when the company went bankrupt later that year, it owed Mr. Walton more than £2,000.
	Mr. Walton was diligent before allowing the company to collect that year's subsidy. He contacted the Rural Payments Agency office in Northallerton, North Yorkshire, to ask specifically whether he would be harmed in future if the transfer to the company went ahead. He was assured that he would not lose out as a result. Given the rules at the time, the civil servants who gave him that advice were entirely right to do so, but when the single farm payment scheme was introduced, he was clobbered to the tune of £5,000 a year.
	The reform of the EU common agricultural policy in 2003 was generally welcomed by Members on both sides of the House. The original CAP was based on the ludicrous policy of high support prices: the more the farmer produced the greater the benefit he received, which led to overproduction and the selling of cheap food to the developing world. As a result, local and third-world producers were undercut, local economies were damaged, and millions of people were worse off.
	The new CAP has done much to mitigate these problems. Farmers are now freer to produce according to market rules. The environmental damage caused by overproduction and intensification has been reduced, and farmers are encouraged to pay more attention to environmental standards and protocol. It is worth noting in passing that many of us had hoped that there would be further serious steps forward in reducing this. News over the past two days has not been promising, although whether it would be within the ambit of the debate for the Minister to comment on that when he replies, I do not know. I leave it to the Chair.
	Unfortunately, the way in which the Government introduced the policy of the single farm payment was an unmitigated disaster, both for Mr. Walton and for the many thousands of farmers across the country who received late payments. The decision how to distribute the payments was left to individual EU states. As we all know, the Government decided to introduce the dynamic hybrid system. Up till 2012, payments would be based upon a combination of historic and regional average payments, with the regional average component increasing each year.
	The historic reference amount would be calculated on the basis of the livestock and arable aid claims submitted for the farmer in the years 2000, 2001 and 2002. To allow the industry time to adjust, historic payments would be gradually phased out and flat rates phased in, with the historic payments worth 90 per cent. of the total amount for 2005. This rule and its implementation—the choice made by the Government—have led to Mr. Walton's downfall. Because he did not claim the £100 per acre payment to which he was entitled in 2000, he has lost out to the tune of £15,000 over the past three years, despite the fact that during 2000 the farm remained in his control, he was eligible for the payment and he did, in fact, farm the land.
	In 2005 Mr. Walton submitted an application for a stage 2 SPS appeal to the Rural Payments Agency. He was given the opportunity to make an oral presentation to a hearing on 4 November of that year. Unfortunately, the single payment appeal panel decided to uphold the decision reached by the RPA. That was later confirmed by a Minister.
	I am not asking for a miracle this afternoon. I understand that the Minister is constrained in what he can do, but I trawled through the appropriate European Council regulation No.1782/2003 to see whether there was any scope for helping Mr. Walton—and I was heartened when I discovered that in certain extraordinary circumstances, the historic reference years could be moved, by just one year or by all three. The relevant years could therefore be 1997, 1998 and 1999. Paragraph 4 of article 40 states:
	"Force majeure or exceptional circumstances shall be recognised by the competent authority in cases such as, for example"—
	a number of cases are listed, including severe ones such as the death of the farmer, long-term professional incapacity of the farmer, and a severe natural disaster gravely affecting the holding's agricultural land. However, it was clear from the wording of the regulation that the list of examples was not meant to be exclusive, and there was some discretion for the authority concerned.
	For a small farmer with a relatively small holding, affected as my constituent has been by a technicality, when the failings of the agency to which he had to appeal were many and manifest, affecting thousands of farmers across the country, it seems demonstrably unfair that the rules should be applied in pernickety detail in his case, whereas the agency was able to flout the rules, fail to make payments, and cause inconvenience and suffering throughout the country. The case required a certain amount of leeway to recognise the circumstances, but that leeway was not given.
	I have read articles 40 and 44 of the regulations, and it seems to me that those could cover commercial arrangements between a farmer and a company, if the authorities so desired. I ask the Minister to re-examine Mr. Walton's case, use his best offices and those of his civil servants, contact the RPA and see whether there is some way in which Mr. Walton, a small farmer struggling to make a living, could have an injustice righted.
	Sam Walton is of maturing years—although if he is watching this on parliamentary television, he will doubtless be grossly offended by my saying so. He is a remarkably youthful looking man, of course, because of his years of working as a farmer, but it is fair to say that he is older than the average farmer. Mr. Walton has worked hard all his life and contributed enormously to east Yorkshire life. He is an extremely popular figure with those who know him. However, he has been caught out by an administrative difficulty that was no fault of his own. In fact, he had gone to every possible length to ensure that he was being prudent and cautious, by speaking to civil servants before acting.
	I hope that the Minister can look into Mr. Walton's case again and ensure, as much as possible, that agencies such as the Rural Payments Agency consider such cases more humanely. If those agencies were run with exemplary efficiency and fulfilled their every requirement to the letter, it might be more understandable that they should apply the rules to the letter when they penalise small farmers. When agencies are not run in that way, it makes it all the more difficult for people such as Mr. Walton to accept the palpable injustice with which they have been treated.

Jonathan R Shaw: I do not want to build up false hopes. The hon. Gentleman said that his constituent is a popular man; if we can get some responses for his constituent, the hon. Gentleman will be an even more popular Member of Parliament than I am sure he already is. My colleagues in the Labour party will, no doubt, send me letters from his constituency after reading those comments.
	We want to ensure that the agency recovers, and we believe that it is recovering. A number of steps have already been taken to improve the level of service that the RPA can provide. The RPA has taken measures to reduce the proportion of its staff who are on short-term contracts—a situation that has been criticised by the Select Committee and the Audit Commission. That is an important and necessary step to stabilising the work force. Together with a comprehensive programme of staff training, it is part of the long-term strategy to deliver improvements in the quality of service provided by the RPA.
	IT systems have been enhanced to make it easier for one member of staff to deal with a farmer's entire claim. It became clear, over a weekend, that too many staff were dealing with one particular farmer. We have changed that system and there are significant improvements under the leadership of Mr. Cooper. There have been some encouraging signs of progress.
	The Rural Payments Agency met the first of its targets for SPS 2007 payments, to make 75 per cent. of full payments by value by the end of March, some five weeks ahead of schedule, and figures published today show that 90.5 per cent. of the fund—£1.312 billion— has been paid to more than 99,000 customers. That means that the RPA has met its second target of making 90 per cent. of full payments by value by the end of May. The agency is working hard on completing the processing of the outstanding claims as soon as possible.
	While improvements have been made, we all recognise that we cannot and must not stop there. Ministers are committed to working with the agency to ensure that the scheme delivers and continues to improve for the future and, most importantly, for the customers that it serves—England's farmers. I am grateful to the hon. Gentleman for bringing this case to the Floor of the House, and I undertake to accede to his request to have another look to ensure that everything that could possibly have been considered was considered at the time. I will then write to him.
	 Question put and agreed to.
	 Adjourned accordingly at  nine  minutes to Four o'clock.